Oligarchy

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EB-5

For America’s EB-5 green card program, this week has been up-and-down/down-and-up (delete as applicable, depending on how you stand on the vexed question of whether the origin of money should be checked before it is invested in high end property, and whether its owners should be allowed into the country with no questions asked).

The EB-5 program was introduced back in 1990, to award a U.S. Green Card to immigrants who invested in projects that created more than 10 jobs. It was a response to Canada’s Immigrant Investor Program, which was intended to attract wealthy residents of Hong Kong concerned about its then-just-announced handover to Beijing’s control.

Congress renewed the US program year-after-year for decades, and it became increasingly out of date, not least in the fact it remained paper-based, and thus shut out of automated checks for fraudulent applications.

• “USCIS is unable to comprehensively identify and address fraud trends across the program because of its reliance on paper-based documentation and because it faces certain limitations with using available data and with collecting additional data on EB-5 immigrant investors or investments,” the Government Accountability Office concluded in 2015.

It is unsurprising, therefore, that the program has been repeatedly targeted by fraudsters, such as in this mammoth scam which came to court last year. Equally significantly, the minimum investment was set at $500,000, but – over the decades — inflation made that less and less of a good deal for the government (half a million dollars could buy you twice as much back in the days of the first President Bush as it could now), meaning U.S. visas have been getting progressively cheaper.

Appeals for reform have tended to fall into the too-complicated/too-boring/too-unpopular-with-lobbyists file and they looked doomed under Donald Trump, owing to his own family’s enthusiasm for attracting EB-5 funding for its real estate investments. However, in a rare sensible decision, in 2019 Trump’s White House decided to increase the minimum investment to $900,000, which sharply reduced its appeal to immigrants, and applications dropped sharply. The reform also restricted individual States’ ability to declare places to be “targeted employment areas”, which was a designation that had become notoriously easy to gerrymander.

That annoyed the kind of real estate investors who had become accustomed to being able offer clients permanent residency in the United States for the price of an apartment, and some took their annoyance to court. It was this that led to the first major development of the week, when a Californian court ruled that the White House had acted illegally because the Secretary of Homeland Security at the time was merely “acting” and not “confirmed”, meaning he did not have the power to impose the change.

• “Construction is one of our nation’s greatest job creators, and EB-5 provides capital that is the catalyst to getting projects off the ground,” said a statement from the company that brought the challenge. “We currently have multifamily projects on the boards that could amount to creating over 10,000 jobs in the next three years if sufficient capital was available.”

EB-5 enthusiasts did not have long to celebrate, however. In one of those legislative developments that seems to happen all the time in the United States, but nowhere else, the law governing the visa program will quietly lapse at the end of June, thanks to no one being able to agree with what to do with it. Up to now, it has always been packaged with must-pass legislation but now, dissected out on its own, it has run into trouble.

• “A narrow subset of big moneyed and corrupt interests has now shown that they would rather kill the program altogether than have to accept integrity reforms designed to clamp down on their bad behavior,” Senator Chuck Grassley, who has been pushing a bipartisan reform effort, said.

He and Senator Patrick Leahy have been pushing for the program to be reformed for almost a decade, including in a latest bill, which would aim to reduce fraud and various other weaknesses. Such a reform effort is long overdue, not least because other countries, which introduced golden visa programs around the same time have already sharpened them up. Canada abolished its federal immigrant investor visa in 2014, and even the UK started checking where the money buying its visas came from a year later.

AZERBAIJAN

Good news for transparency in London, where a court has ruled that journalists are allowed to reveal the identity of an Azeri couple battling confiscation of its assets. Suleyman Javadov is the son of a former deputy energy minister in Azerbaijan, while his wife Izzat Khanim Javadova is a cousin of President Ilham Aliyev. The National Crime Agency is currently seeking to confiscate 6.5 million pounds (around $9 million), which it has frozen in accounts belonging to the couple.

• “The NCA suspects the money is the proceeds of corruption, theft or embezzlement. The couple say the funds are legitimate rental income from their properties in Azerbaijan,” according to Transparency International’s write-up. They will be back in court in July.

The case contains the usual sordid details of shell companies, offshore bank accounts, and well-networked insiders having more wealth than they know what to do with. The detail that caught my eye, however, was the fact that Javadova chooses to spend her inordinate wealth organizing club nights in which she plays as a DJ, under the stage name “Mikaela Jav”.

• “The underground scene, it’s all about the people having fun and loving the music.
  Never bad vibes, just love,” she declares on her SoundCloud.

You can join the party from the comfort of your own home, via one of her YouTube videos, and she is clearly seriously committed to electronic music. In 2015, she even created her own label Love the Underground Records, to express her “passion and love for dark and heavy tech-house through techno, whilst also using this as a platform to support the next generation of upcoming underground talent. With a strict no vocals policy, the label endeavors to showcase the best Of Techno, Tech-House, Deep-House and Minimal Music”. The label’s twitter account has not been active since 2016, however, so it may be that she’s got bored of the scene.

Now, I have spent many happy years trekking out to techno clubs every weekend, and do not intend to mock her for her passion, but I still find it fascinating how many of the children of politically well-connected and extremely wealthy people choose to believe they’ve got what it takes for a career in popular music, despite abundant evidence to the contrary. There have in fact been so many that, at a Coda Live event earlier this year, we managed to put together a Kleptovision song contest, in which viewers could vote for a winner out of contestants from Georgia, Ukraine and Azerbaijan.

I, of course, support everyone’s right to follow their star but, I can’t help thinking that, considering the many urgent needs of their homelands and the extremely questionable ways their families have generally obtained their money, that there could well be better ways for them to spend it.

CARBON INEQUALITY

I remain in awe of Adam Tooze’s work ethic. He somehow manages to produce well-written articles on multiple topics, as well as dauntingly-well-researched books, plus a newsletter, all presumably in the same 24 hours which seem to barely suffice for me to make my children their packed lunches.

I particularly liked his recent dissection of inequality in carbon emissions, which laid out a lot of things I had half thought-about, but never got round to actually investigating. The rise of China and other big Asian economies has changed the debate about who should be responsible for battling climate change. But obscured within the gross numbers is an important distinction between the very wealthy –who emit a lot of carbon, and who are emitting more all the time, wherever they come from– and everyone else.

• “If there is to be a stabilization of global emissions it will involve a U-turn in the trajectory of consumption, particularly amongst the top ten percent of households in North America, the Arab world and Asia,” he writes.

So what does that mean? If the world is to be saved, the governing elites of those regions must choose to emit less carbon and must commit to doing so themselves. This seems like a distant prospect, and all in all I think I need to write more about oligarchs and their carbon emissions.

WHAT I’M READING

Yesterday evening I was feeling weary after a day trying to get some work done while worrying about the new kitchen being installed, but perked up immediately upon opening The Fall, John Preston’s ludicrously readable account of the life of press baron Robert Maxwell. Maxwell’s life, which began in a village in Eastern Slovakia, and ended with his plunge from a super-yacht in the Atlantic, was almost impossibly eventful. Throughout the book, Maxwell behaves revoltingly and yet – and this is testament to Preston’s skill as a storywriter – he remains somehow understandable, if not exactly what you’d call sympathetic. I can’t recommend it highly enough.